US parent to get bulk of Sands IPO proceeds
The biggest winners from Las Vegas Sands Corp's proposed spin-off of its Macau business look to be the company's creditors in the United States and Macau, data from the final listing prospectus released yesterday by Sands China shows.
As much as HK$14.68 billion or 57 per cent of the total amount to be raised in Hong Kong will flow back to the New York-listed parent company if the deal is priced at the top of the range. About HK$2.33 billion or 9 per cent of the gross proceeds will be used to pay down Macau-specific loans, according to the listing document.
'This [initial public offering] delevers and derisks our balance sheet, both for Sands China and importantly for the parent,' Sands China chief executive Steve Jacobs said yesterday at a press briefing.
Much of the proceeds will pay a hefty portion of Las Vegas Sands' US$11.76 billion of debt. And at least HK$3.88 billion from the Hong Kong share sale - 15 per cent of the deal if priced at the high end - will be used to resume work on the massive but half-finished 6,400-room Cotai casino-hotel project across the street from the 3,000-room Venetian Macao.
Las Vegas Sands is trying to raise HK$19.41 billion to HK$25.96 billion selling a roughly 23.5 per cent stake in Sands China, which owns and operates the Venetian, Sands and Four Seasons casino-hotels in Macau.
Las Vegas Sands is selling 600 million existing shares and 1.27 billion new shares in Sands China to be priced at HK$10.38 to HK$13.88 each. Ninety per cent of the deal is earmarked for institutions and the rest for Hong Kong retail investors. Pricing is expected to be set on Saturday and the first day of trading is scheduled for November 30.
If priced at the high end, the sale would be Hong Kong's second-biggest listing this year following China Minsheng Banking Corp's planned share sale.
A greenshoe option to underwriters led by Goldman Sachs and Citigroup entitling them to buy a further 187 million existing shares in Sands China could net additional proceeds of up to HK$2.6 billion for the parent.
The remaining HK$3.5 billion in proceeds based on top-of-the-range pricing, or 13.5 per cent of the offering, would either go towards repaying Macau-specific debt or work on the Cotai complex. Sands China plans to keep HK$775 million for general corporate purposes.
Sands China has already spent US$1.7 billion of a projected US$3.7 billion budget for the Cotai project. This included Sheraton, Shangri-La, Traders and St Regis-branded hotels and would begin opening in phases from June 2011, the company announced yesterday.
In addition to proceeds from the share sale, it said it recently secured 'commitments' for US$1.45 billion of the total US$1.75 billion in project financing loans it was seeking to fund the completion of the Sheraton/Shangri-La complex.
Sands China is trying to hire 10,000 to 12,000 construction workers to finish the project, about the same number it laid off in November last year when work was suspended.
The first phase will include 3,700 hotel rooms at the Shangri-La, Traders and Sheraton-branded properties, a theatre with a resident entertainment production, part of the retail complex and a casino with 670 gaming tables and 2,200 slot machines.
A second Sheraton hotel tower with 2,300 rooms was expected to open in December 2011, executives said.
Spending plan
Some of the money will go to paying Macau debt or to the Cotai project
Sands China will keep for general corporate purposes a sum of, in HK$: $775m
